Sotheby's CFO Calls the Bottom of the Art Market
Sotheby's is calling the bottom of the art market. The company has spent a year getting battered by an art market unwilling to spend a fortune (as it had in recent years) and a financial market unwilling to tolerate the outcome. Quarterly earnings fell 87 percent, reflecting how dire the situation has become. For contemporary art, the average auction price fell 76.2 percent from May 2008 to the present. Nonetheless, Sotheby's CFO has said that unless there's some unknown floating around out there, we've seen the worst of the art slump.
For every $100 in auction sales in the second quarter of 2009, Sotheby's picked up $21.30 in commission revenue – up 41 percent from a year earlier. This increase occurred because there were fewer sales of high-priced lots. Basically, low inventory quality drove this ratio higher. Expensive pieces tend to have lower commissions. Auction-related revenue plunged by more than 50 percent for the first half of the year, to a mere $197 million.
Let's hope the CFO is right on this – we all want an art market comeback.
Reader Comments (Page 1 of 1)
Goto98 Aug 5th 2009 10:05PM
Not to sound overly dire about our situation, but far smarter minds 'called the bottom' long before this.... and were wrong.
Business leaders of the most prominent companies in America will tell you behind closed doors that they believe we have some ways to go before things being to look up, while at the same time telling shareholders everything is looking up.
The point being, no one can predict the end although many will try, and some will get lucky.
My two cents, with unemployment at historic lows, I highly doubt the art sector has seen the bottom.
Robert Currie Aug 10th 2009 9:43PM
I must agree with the other contributor. To predict the bottom is premature and statistical unsupported. There are too many variables trending down and the stability rate is unstable. Even-though many of us in the business would wish CFO predictions to be accurate, prevailing wisdom and reality does not offer a convincing outlook.